The Term Corr(å _R, ε _T) = 0 Tells Us

question 3

Multiple Choice

The term Corr(å _R, ε _T) = 0 tells us that:

• A) the error terms of company R and T are 0.
• B) the unsystematic risk of companies R and T is unrelated or uncorrelated.
• C) the correlation between the returns of companies R and T is zero.
• D) the systematic risk companies R and T is unrelated.

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